North African Business journalist Suhail Karam reports from Bloomberg that Morocco’s central bank won’t budge on interest rates, even as the country’s economic prospects “took a turn for the worse.”

Karam sees Morocco’s economic stability, which was established in 2011, as threatened by protests over jobs, poverty, and human rights. The state’s reform efforts have recently pushed tens of thousands of teachers and medical school students to rally against what they call a push to privatize a costly public system.

Economic growth has remained too weak to generate enough jobs, while inflation is running below the central bank’s forecasts, having touched negative territory twice already this year, according to Karam. Lending also continues to be depressed as a result of a slowdown in the real estate industry, lower private investment, and tighter regulations.

The government has made economic stimulus which should raise VAT repayments for private firms 1.1 percent of gross domestic product this year from 0.7 percent in 2018.

Karam predicts that Morocco will see a general increase of wages, Morocco’s “broadest wage hike,” since 2011 next month. Under an agreement reached in April, a 10 percent increase in the private-sector minimum wage will be delivered over two years starting in July. “That, alongside this year’s value-added tax reimbursements, means the key rate will likely stay at a record-low 2.25% when the central bank meets on Tuesday,” He writes.

The hike is expected to boost “demand for domestic goods and social peace,” said Rachid Aourraz, an economist and founding member of the Moroccan Institute for Policy Analysis. “But it’s not the sort of wage hike that will see people put some money on the side or rush to a bank to buy a car or a home.”

Abdelouahed El-Jai, a former central bank director and now an economist at Rabat-based think-tank Cerab said, “On paper, Bank Al-Maghrib should cut the rate. But it shouldn’t be done after the government took steps that will boost demand. The central bank will want to see the effects of these measures on inflation before considering a rate move, probably in six to 12 months.”

“With inflation and growth posting lower than expected performances, chances for a rate cut have increased. The repayment of VAT credit arrears can be likened to a fiscal stimulus that does not impact the government’s commitment to budget deficit reduction,” Mark Bohlund, Africa economist said.

“Financing conditions remain satisfactory overall,” Nasreddine Lazrak, chief economist at Banque Centrale Populaire said in an email to Karam. “The central bank covers the entire liquidity needs of Moroccan banks and interbank rates are close to the key rate.”